A Melbourne-based skincare group that specialises in plant-based products has successfully jumped onto the Australian Securities Exchange in a float that shows the demand and interest in natural and organic consumer goods is booming.
BWX Limited owns, produces and distributes skin and hair care brands such as Sukin, Derma Skin, Renew Skincare, Uspa and Edward Beale, as well as manufacturing a range or branded products for third parties.
In an initial public offering that raised $39.3 million, BWX commenced trading on the ASX on Wednesday, with its shares opening at $2.12, a 41% premium on the initial share price offering of $1.50.
By the close of trade on Wednesday, BWX shares were trading at $2.26 a share, a 51% premium of the company’s initial price. This gives the company a market capitalisation of $205 million.
BWX recorded pro forma revenue of $45.1 million in the 2015 financial year and has forecast revenue growth of $50.1 million in the 2016 financial year, an increase of 11.2%.
Net profit after tax for the business was $9.6 million for the 2015 financial year and in a statement at the end of October, BWX said it is forecasting a 15.6% increase in net profit after tax to $11.1million in the 2016 financial year.
The growth is being driven by the popularity of its key brands, including Sukin, with pharmacy sales for that product growing by 40% in the 12 months to August 2015.
According to BWX, this places Sukin in the top five skincare brands sold in Australian pharmacies.
BWX chief executive John Humble said in the same statement the natural segment of the Australian skin care market is expanding rapidly.
“We are a growing and profitable Australian skin care company,” Mr Humble said.
“BWX is a company in control of its own destiny owning the number one pharmacy ‘natural’ skin care brand in Australia while controlling manufacturing, packaging, marketing and its distribution network.”
The growth in this sector of the skincare market is backed up by research from IBISWorld, published in May, which found the local market for organic cosmetics and toiletries distribution has grown by an annual rate of 17.4% between 2010 and 2015.
The market currently generates revenue of approximately $265 million and is forecast to grow at an annual rate of 9% between 2015 and 2020.
According to IBISWorld, growth in the sector is being driven by “surging” consumer awareness and increasing concerns about the chemical compounds in traditional cosmetics.
This has coincided with increases in household discretionary income, which IBISWorld predicts will grow at an annualised rate of 2% over the five years from 2014-15, creating further opportunities for growth in the market.
“As consumers become increasingly knowledgeable and aware of issues such as carcinogenic chemical compounds and unethical research and testing, they are shifting towards organic products,” IBISWorld said.
“Consumers are willing to pay a premium for organic cosmetics that are not tested on animals, contain a higher amount of organic and naturally occurring substances, and are higher in quality.”
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Eloise is an experienced business journalist and editor, who has held senior editorial roles at SmartCompany since 2014. Prior to joining SmartCompany, Eloise was news editor at Books+Publishing, the trade press for the Australian book industry. Eloise has degrees in media and communications, marketing and business management, and political science. You can follow her on LinkedIn, and Twitter at @ellykeating.
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